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A scoping study into the Devon pit, at the Lake Carey gold project in Western Australia, has proven that mining operations could be economically viable.

ASX-listed Matsa Resources on Wednesday noted that the scoping study showed that the Devon pit could deliver a potential cash surplus of A$40.7-million over an estimated mine life of 12 months, with the production of around 37 000 oz of gold.

Operating cash costs for the Devon pit have been estimated at A$1 144/oz, with the average gold price assumed at A$2 250/oz.

“Based on the positive outcomes of the scoping study, we will now immediately move ahead with plans to complete the necessary studies and works to obtain mining approvals,” said Matsa executive chairperson Paul Poli.

“The results of this scoping study work make a fantastic addition to Matsa’s existing Fortitude and Red October mines. Recently, we released a conceptual processing study that demonstrated a positive cash flow of upwards of A$50-million at Fortitude, and combined, the Devon and Fortitude openpits alone could provide collective positive cash flows of A$80-million to A$90-million, at an assumed A$2 250/oz gold price.”

Poli pointed out that the Devon pit mine was located on an existing mining lease that was currently under care and maintenance, allowing the company the option to rapidly bring the Devon pit back into operation.

“The opportunity to generate early cash flow from this high grade deposit presents a compelling case. The Devon pit appears well placed to deliver significant cash flows for the company and great value for our shareholders.

“The exploration potential at Devon is significant and we’re about to embark on another 3 500 m exploration drilling programme that will seek to deliver new discoveries and, in time, add additional ounces to the resource. Devon is an integral cog in our strategy to build and operate our own mill at the Lake Carey project.”